Pontifications: Boeing MAX 10, “797” NMA dominated ISTAT headlines

By Scott Hamilton

March 13, 2017, © Leeham Co.: The soft launch of the Boeing 737-10 and the prospective Boeing “797” Middle of the Market aircraft easily were the headline news items to come out of the annual ISTAT conference in San Diego last week.

The “797,” as the MOM-sector aircraft was unofficially dubbed, brought enthusiastic reaction.

The MAX 10, not so much.

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If Boeing builds MAX 10, will customers come?

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Introduction

March 7, 2017, © Leeham Co.: If Boeing builds the 737-10, which appears increasingly likely, will customers come?

This is always the multi-billion-dollar question for any aircraft and engine manufacturer.

For Boeing, launching the 737-10 is a low-risk, and in the eyes of many, futile effort to stem the bleeding of market share between the MAX 9 and its rival, the Airbus A321neo.

  • “That’s the most absurd thing I’ve ever heard. What is he, flying downhill?” Airbus’ John Leahy reacting to claims by Boeing’s Randy Tinseth that the 737-10 has more range than the A321neo.

Depending on who’s counting and how the numbers are calculated, the A321 sales outpace the MAX 9 by a factor of four or five to one. LNC calculated last year that the ratio is more likely 3:1, identical to the market share split between the predecessor airplanes, the 737-900ER and the A321ceo.

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Pontifications: Boeing 737-9 roll-out–Nothing Special in the Air

By Scott Hamilton

March 6, 2017, © Leeham Co.: Boeing rolls out its 737-9 MAX tomorrow.

Last week, I received a call from one of the network/cable news organizations asking, What’s special about this airplane?

The answer is: Nothing.

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Pontifications: Alaska’s A321neo test drive

By Scott Hamilton

Feb. 13, 2017, © Leeham Co.: It was subtle, but it was there: Alaska Airlines will take the Airbus A321neo for a test drive.

This will happen via its new sibling, Virgin America, which has 10 A321neos on order. VA is an exclusive A320 operator. Alaska flies only Boeing 737s. The acquisition of VA by Alaska immediately raised questions whether Alaska will retain the Airbus fleet and orders or phase them out in favor of the 737.

Of more interest to partisans than to me, the question over the future of the Virgin America brand also became a top question.

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Embraer 3Q2016 results: Stabilized situation

By Bjorn Fehrm

1 November  2016, ©. Leeham Co: Embraer reported slightly better than expected results for  3Q2016, with revenue up by 18% to $1,514m. Gross margin for the company is at a stable 19% (18% 3Q2015) and EBIT before one-off was $95m ($85m).

After one time charges, the result was a loss of $34m, attributable to a layoff program of $118m and additional charges in the Corruption affair the company has been involved in. The company reiterated its guidance for 2016, adjusted downwards in last quarters presentation.

The Commercial Aviation side delivered more aircraft than expected and Defense & Security increased revenue by 19%. The business jet side did not expand as planned.  Despite the certification of new models (Legacy 450), the delivery of new business jets is stuck at about 50% below what was expected, around 25 units per quarter instead of more than double that at the end of 2015.

embraer-175-plus-exterior

Embraer’s commercial aircraft best seller, the E175 being in Alaska livery. Source: Alaska Airlines.

While deliveries of commercial aircraft held up at 29 units, sales are not keeping pace with 17 aircraft sold in the quarter. Deliveries year-to-date are at 76 E-Jets while orders are at a low 51 for a book-to-bill of just 0.67.

Defense & Security stabilized with the KC-390 military transport program now progressing. The flight test program now has two aircraft.

Here the details of the financial results for the divisions and their aircraft programs: Read more

ATR targets Bombardier’s last stronghold: the USA

May 17, 2016, © Leeham Co.: ATR, the dominant manufacturer of turboprop airliners, last week undertook its first major marketing push in the USA in 10 years.
The US has been the exclusive domain for passenger turboprop service above 50 seats. (FedEx operates ATR cargo aircraft.)
But the time has come for ATR to return to the US for a number of reasons.

  • The Bombardier Q400 is aging in US service, and replacements will be needed soon.
  • The ATR 72-600 has been modernized with a new glass cockpit, larger overhead bins and other features.
  • The aircraft now has an optional forward boarding door, a desirable feature in the US, allowing jetbridge boarding.

Horizon Air, a subsidiary of Alaska Air Group, operates 52 Q400s, including 14 Next Gen models, according to the Ascend data base. These are all of them in the US. Horizon is returning 15 of the Q400s come off lease, replacing them with Embraer E175s.
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Alaska, Virgin confirm merger

AS_VX MapApril 4, 2016, (c) Leeham Co.: Alaska Air Group and Virgin America confirmed weekend reports that they reached a deal to merge.

The replay of the Alaska webcast/conference call, with slide show, is here.

Rationale includes what LNC outlined in our March 29 post: growth, access to more gates and slots. Alaska officials said Virgin’s presences in California, combined with Alaska, will give Alaska to #1 market share position on the US West Coast, passing Southwest Airlines’ 21% by one percent.

Here are some highlights from the conference call:

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Virgin America does have some attractive attributes

March 29, 2016, © Leeham Co.: A report that JetBlue and Alaska Airlines submitted bids to buy Virgin America spurs the thought: this isn’t as wacky as it appears on

Virgin America route map. Click on image to enlarge.

the surface.

When news emerged last week that VA was shopping itself after interest was expressed, many thought, quite naturally, why?

Dan Reed neatly summarizes this argument in his column at Forbes.

Virgin America has few tangible assets. It leases all but about seven of its 10 Airbus A319s and 50 A320s. It’s not dominant in any city or route it serves. The leases are probably, on a relative basis, rather costly.

It has few slots at the few slot-controlled airports it serves (Chicago O’Hare, New York La Guardia and JFK airports and Washington Reagan National Airport), and only a few gates at any given airport—hardly enough to really boost presence of either Alaska or JetBlue.

Why should either airline want Virgin America?

Here’s why.

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Pontifications: Bad week for aerospace stocks

Feb. 1, 2016, © Leeham Co. Ouch.

Hamilton KING5_2

By Scott Hamilton

Boeing stock tanked about 10% last Wednesday when the company surprised analysts with unexpected news and below expectations 2016 guidance.

Bombardier became a penny stock.

What the heck happened?

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Alaska Air’s brand refresh after 25 years

Jan. 25, 2016: Alaska Airlines announced its first rebranding in 25 years today, revealing a new livery and An Alaska Airlines 737-800, newly painted in the airline’s 2016 refreshed brand, is ready to be revealed at the airline's maintenance hangar in SeaTac, Washington on Jan. 25, 2016. This month, Alaska Airlines revealed the most substantial updates to its brand in a quarter century. Beginning Jan. 25, Alaska fliers will see the visual updates in new signage at the airport, an all-new airplane paint job, a refreshed website and mobile app, and more.new logo font.

The airline is in a fierce battle with Delta Air Lines, as the latter develops Seattle into a major hub, adding domestic flights to feed its international routes. Seattle is Alaska’s principal hub and with its sibling Horizon Air continues to maintain a 51% market share. Read more